THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

WOLF BLITZER, HOST: Happening right now, new tests of the Senate's support for anti-war legislation. This hour, key votes on Iraq and an intriguing subplot involving White House hopefuls. We'll talk about it all with a Senate Democrat, Chris Dodd. Plus, the president's choice to monitor U.S. wars. The White House isn't calling him a czar. But an architect of the Iraq invasion has another word to describe this new job, that word "absurd."

And they laughed, they fought and they cried foul.

What do the Republican presidential candidates have to prove now that their second debate is behind them?

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Day by day, vote by vote, Democratic leaders in Congress say they're getting closer and closer to achieving their goal of putting the brakes on the war in Iraq. And more Republicans are actually moving slowly and warily along with them. New Senate votes today reflecting some shifting views among members of both parties, including some presidential contenders.

Let's begin our coverage this hour with our Congressional correspondent, Dana Bash -- Dana, what we learned today, what does it say about Republican opposition to the war?

DANA BASH, CNN CORRESPONDENT: What we learned today, Wolf, is that Republicans may still be reluctant to set a deadline for troops to come home, but they are more and more eager to express the frustration they're hearing from their constituents about the direction of the war.

That is why a vote on a Republican measure on Iraq was so significant.

(BEGIN VIDEO TAPE)

UNIDENTIFIED MALE: Mrs. Dole?

BASH: It was a milestone in the Iraq War debate.

UNIDENTIFIED MALE: On this vote, the yeas are 52, the nays are 44.

BASH: For the first time, the vast majority of the president's fellow Republicans voted to directly challenge his Iraq policy.

BASH: The GOP measure called for Iraqis to meet benchmarks, show military and political progress. It also held the president accountable, saying, "If Iraqis failed to meet those benchmarks, the president would have to revise his Iraq strategy and Congress would cut off $3 billion in economic aid to Iraqis.

Republican leaders conceded the significant number of GOP voters was a sign of their growing impatience with the war.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: The Iraqi government, it strikes me, needs to understand that they're running out of time to get their part of the job done.

BASH: The GOP measure fell short of the 60 voters needed to pass. Most Democrats, in search of a deadline for troop withdrawal, voted no.

SEN. HARRY REID (D-NV), MAJORITY LEADER: Very tepid. Very weak. A cup of tea that's been sitting on the counter for a few weeks, Mr. President. You wouldn't want to drink that tea.

BASH: As for the Democrats, the Senate decisively rejected their measure to force an end to the war by choking funding for U.S. combat operations. But the proposal did pick up support from Democrats, who had opposed cutting off money for Iraq.

SEN. JOSEPH BIDEN (D-DE), PRESIDENTIAL CANDIDATE: We're not going to be able to change this god awful war. This war is a disaster.

(END VIDEO TAPE)

BASH: Now, all of these voters amounted to what one GOP aide called a pressure valve release and a chance for senators on both sides of this issue to express their varying degrees of frustration before the really hard part streets. And that is going to be bipartisan negotiations with the White House on a war spending bill the president must sign, all sides agree, by Memorial Day -- Wolf.

BLITZER: And they've got to bring the House of Representatives into this game, as well -- not an easy challenge for any of them.

BASH: Not at all.

BLITZER: Dana, thanks very much.

The White House today describing the new post of war coordinator as more of a red tape cutter than a military planner. A day after he got the nod from President Bush, there are still some gaps in Lieutenant General Doug Lute's job description.

Questions remain about why the position is needed at all.

Let's go to our White House correspondent, Ed Henry -- Ed, what have you been hearing, specifically from conservatives, about this new job?

ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Well, Wolf, it's interesting, even Republicans are confused about the rationale for this post. They charge that it reveals a White House in disarray over what to do next in Iraq.

(BEGIN VIDEO TAPE)

HENRY (voice-over): Conservatives are flabbergasted by President Bush's decision to tap Lieutenant General Douglas Lute as the White House war coordinator.

RICHARD PERLE, FORMER CHAIRMAN, DEFENSE POLICY BOARD: The idea of bringing in an outsider to tackle what is arguably the administration's most urgent priority makes no sense at all to me.

HENRY: A Lute classmate at West Point praises his candor and experience, but says this position is a waste.

BRIG. GEN. JAMES MARKS (RET.), CNN MILITARY ANALYST: You know, there are really two ways that you get attention in this town. It's that you hit somebody in the face with a shovel or you -- or you have budget authority. And Doug might have a shovel, but he won't have budget authority. So that's going to be the rub that makes it difficult.

HENRY: Tony Snow struggled to explain why it took five years for the White House to figure out it needed this.

TONY SNOW, WHITE HOUSE PRESS SECRETARY: I don't know. I mean, I think what happened is, again, as you're taking a review, it -- it became clear to us that this -- as you develop -- as you move into a new phase of the war -- keep in mind, we are still in the process of deploying people in this New Way Forward, as the president called it.

HENRY: And the White House is still in the process of figuring out exactly what the job description is.

SNOW: How many times have people been in the field where somebody says here's a problem we have. I write notes and it never gets up to the top?

Well, part of his job is to cut through that. HENRY: Nonsense to Richard Perle, who still counts himself as an admirer of the president, but charges Mr. Bush has been ill-served by top staff.

PERLE: The whole idea strikes me as absurd. This is a job for the national security adviser, for Steve Hadley. And if Steve can't do it, then perhaps somebody else should be the national security adviser.

(END VIDEO TAPE)

HENRY: And Richard Perle says he thinks back to a previous national security adviser of the stature of Henry Kissinger and asks himself would Kissinger have gone to President Nixon, and on the most urgent, pressing priority affecting the country's national security, asked him to bring in an active duty general to handle it?

And Richard Perle says absolutely not -- Wolf.

BLITZER: Ed, when is the formal announcement of this new appointment, this new job, going to take place?

HENRY: Well, that's very interesting, in fact. Usually for an appointment like this, we'll see the president himself come out before television cameras with the appointee and actually do it.

Last night, instead, we got a paper statement from the president just announcing it.

And a lot of people are wondering about that, because basically General Lute is going to need a public endorsement from the president, not just a piece of paper. He's going to need the president throwing his arm around him and saying look, he's my guy. You're going to need to listen to him. That's going to help him get some clout, Wolf.

He doesn't have that yet.

BLITZER: Ed Henry watching it at the White House.

There's a developing story we're watching here in Washington. The board of the World Bank discussing the fate of its embattled president, Paul Wolfowitz, right now. He is accused of breaking bank rules by arranging a generous pay package for his girlfriend.

Let's go to our Zain Verjee.

She's getting some new information.

What are these deliberations about right now -- Zain.

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Wolf, CNN is learning from several U.S. officials that the U.S. and the World Bank board, along with Paul Wolfowitz, are in final negotiations for him to leave the World Bank.

Now, under the proposed deal, Wolfowitz would resign over the scandal of arranging the promotion and pay of his girlfriend, Shaha Riza.

But the World Bank would also acknowledge responsibility for its own role in how the matter was handled.

Now, a source close to Wolfowitz says this is way too premature and not accurate at this point. His lawyer, Robert Bennett, has said that he will not resign under a cloud.

The board's been meeting, Wolf, over the last two days, basically reviewing a report that found Wolfowitz broke World Bank rules.

Now, late on Tuesday, Wolfowitz went ahead to the full board. He made a final appeal to hold onto his job. He said that he has acted in good faith and upon the bank's instruction, as well.

And this is key, Wolf, in the whole thing.

The White House has been supporting him all along. But there's been a turnaround amid the huge international opposition. It really appears to be coming to the conclusion that Wolfowitz cannot stay.

Just moments ago, CNN's Ed Henry also spoke to a senior administration official, who said that the situation was grim, adding, "We just want it to be over one way or another" -- Wolf.

BLITZER: Most of the international community, those who sponsor and fund the World Bank, are now saying he should step down.

Is that right?

VERJEE: Yes. And the pressure is enormous, Wolf. It's really been brewing. I mean just today, as an example, Wolfowitz got a sharp slap from the German government. The development minister came out and said look, Paul Wolfowitz is just not welcome in Germany next week to attend a meeting that's being held on giving aid to Africa.

She came out and added, too, that it would just be a distraction. Wolfowitz was supposed to travel, also, to Slovenia today, but World Bank officials are telling us that that trip appears to be on hold.

But, Wolf, there's a general feeling in many capitals around the world, among many leaders, that Wolfowitz can no longer lead the World Bank credibly and that the reputation of the bank itself, its integrity, is at stake.

BLITZER: Zain, thanks very much.

We'll stay on top of this story with you.

Other news we're following, add Senator Chuck Hagel's name to the small but growing list of Republicans demanding Alberto Gonzales resign as the attorney general. Hagel says Gonzales has "lost the moral authority to lead." Hagel's statement comes a day after very dramatic Senate testimony by the former deputy attorney general, James Comey. Comey says Gonzales pressured his predecessor, John Ashcroft, to approve the president's domestic wiretap program while Ashcroft was severely ill in a hospital room here in Washington.

Let's check in with Jack Cafferty.

He's got The Cafferty File -- Jack.

JACK CAFFERTY, CNN CORRESPONDENT: The House has passed a bill that would allow governors to order federal facilities to lower their flags to half staff in order to honor fallen U.S. service members.

The measure passed 408-4 and it now goes to the Senate, where similar legislation has been introduced.

It was sponsored by Democratic Congressman Bart Stupak from Michigan, whose district has lost close to 20 people in the wars in Iraq and Afghanistan. Stupak says that there have been times in his state where federal facilities have ignored the governor's request to lower their flags. "This inconsistent patchwork display of respect is particularly hurtful to rural communities, where the funeral processions of fallen troops often travel through multiple communities, some with lowered flags, others without."

Stupak says he wrote to President Bush a year ago, asking the president to issue an executive order that would require federal facilities to lower their flags when the governors request it.

He never heard back from President Bush.

Stupak says the sight of a flag flying at half staff is a reminder of the war and the cost we pay.

And that, cost of course, just keeps going up. Since the start of the war now, 3,401 U.S. troops have been killed in Iraq.

Here's the question then -- should governors be allowed to order flags lowered to honor fallen U.S. troops?

E-mail us at caffertyfile@cnn.com or go to cnn.com/caffertyfile -- Wolf.

BLITZER: Thanks, Jack, for that.

See you in a few moments.

Coming up, did Senator Chris Dodd come out of today's key votes on the Senate floor a winner or a loser when it comes to the situation in Iraq?

I'll ask the Democratic presidential candidate where he stands compared to some of his rivals.

Also coming up, are the Republican White House contenders keeping their gloves off?

We're on the campaign trail this, the day after the South Carolina debate.

And they're showing us the money. The bottom line on the candidates, their personal wealth, or lack of it, in some cases.

Stay with us.

You're in THE SITUATION ROOM.

COMMERCIAL

BLITZER: Democratic presidential candidates are staking out some new ground when it comes to the war in Iraq.

Senator Chris Dodd cosponsored a bill that would have cut off money for combat operations after March of 2008. As we reported, that bill was killed in a procedural vote earlier today. But it did pick up some new sport from members previously reluctant to limit war funding.

Joining us now from Capitol Hill, the senator, the presidential candidate, Chris Dodd himself.

Senator, thanks for joining us.

SEN. CHRIS DODD (D), CONNECTICUT: Thank you, Wolf.

BLITZER: You had an ad that you were running leading up to this vote.

I'm going to play a little clip from that ad.

(BEGIN VIDEO CLIP FROM DODD FOR PRESIDENT CAMPAIGN AD)

DODD: Half measures won't stop this president from continuing our involvement in Iraq's civil war. That's why I'm fighting for the only responsible measure in Congress that would take away the president's blank check and set a timetable to bring our troops home. Unfortunately, my colleagues running for president have not joined me.

(END VIDEO CLIP)

BLITZER: Now, that -- that ad that was running. It seems now to be dated, because some of your colleagues did decide to join you when the dust settled today.

DODD: Well, I'm glad they did. And I applaud them for doing so. We're less...

DODD: He supported the motion of cloture. I don't know if he's made a statement in support of the Feingold-Reid-Dodd Resolution here that Senator Obama and Senator Clinton have supported. And I'm -- I'm assuming, as well, that the language -- obviously, I'd love to see people co-sponsor this. But the language calls for a definitive cutoff of funding on March 31st of 2008. That's the constitutional authority we have in the Congress.

So it's -- it's a tough measure, but it's one that I think embraces where many people are -- if not most in this country -- and that is do what we can to protect our troops, but let's change this mission, Wolf. We're on the wrong track here. We're less secure, more vulnerable, more isolated by the hour as a result of this policy, and it needs to change.

BLITZER: Some of your critics, though, Democrats, but mostly Republicans, are saying it may be good politics to try to generate support among the anti-war left in the Democratic Party, but it's not necessarily good policy.

Listen to what Senator John McCain, himself a Republican presidential candidate, said in the debate last night.

SEN. JOHN MCCAIN (R), ARIZONA: If we fail in Iraq, we will see Iraq become a center for Al Qaeda, chaos and genocide in the region, and they'll follow us home.

(END VIDEO CLIP)

BLITZER: All right, what do you say to Senator McCain, because that is a dire assessment, if, in fact, it were to materialize, following a U.S. troop withdrawal?

DODD: Well, it's not our failure in Iraq. This is a civil war in Iraq, Wolf.

Seventy percent of the Iraqi people want us to leave their country. A majority of the members of parliament have signed a declaration calling for us to leave on a firm date. Fifty-one percent believe it's all right to shoot and kill Americans.

Now, I don't know where John is coming from on this, maybe with the president. But 65 percent of the American people think America is on the wrong track in Iraq.

It is chaotic today. Sixty thousand Iraqis have died, 3,400 Americans, $2 billion a week. It's time for a change in this mission.

We're not more secure. It's more dangerous today after pursuing this policy.

So, there are those who are isolated on this issue and wrong about it, in my view. A change in direction is necessary.

John Warner today offered a resolution which I didn't vote for, but is already moving to set benchmarks. You're beginning to see, among rank and file Republicans, a great unease where this president taking us on this policy.

So I'm confident today was the beginning of the end. We're clearly moving in the direction that the Feingold-Reid-Dodd Resolution calls for. I'm thankful to my colleagues who have joined us. I hope they'll co-sponsor. We clearly need to be heading in a different place.

BLITZER: Senator, what do you say to the families who have lost loved ones among those 3,400 plus in Iraq right now?

When you look at them -- your constituents in Connecticut or elsewhere around the country -- what do you say to these people?

DODD: They've done an incredible job. That's why I say supporting our troops is the first mission here. The second is to change the mission here.

But these young men and women -- many of them are just putting up incredible -- doing an incredible job for us. I was at Walter Read Hospital the other day with a young man from Connecticut who had lost his eye or damaged his eye badly. I've talked to others who have come back.

They'll tell you, as well, here, Wolf, they're doing the best job they can. They don't set the policy. They just do the job they're asked to do. But talk to them and they'll tell you. I was talking to one young man, Wolf, who said, look we go in, we spend a month-and-a- half cleaning out the problem. And at the end of the day, an hour-and- a-half, to use his words, after we leave, it's right back where it was a month-and-a-half before.

He said they know where the IEDs are, they know where the ammo dumps are and these people won't even tell us and we're there trying to help them.

The soldiers have done an incredible job. Don't blame them for the policy. They deserve all of our commendation.

But we clearly need to head in a different direction in Iraq.

BLITZER: We're out of time, senator.

But did they die in vain?

DODD: I don't think so at all. Not at all. They've done a noble job and they endure. They must have our enduring gratitude for what they've done.

BLITZER: Senator Chris Dodd, Democratic presidential candidate.

Senator, thanks for coming in.

DODD: Thank you, Wolf.

BLITZER: And still ahead here in THE SITUATION ROOM, they were not with other Republicans on the debate stage. That's because they're still waiting in the wings.

Does the GOP field need some expansion after the latest face-off? And Democrats Hillary Clinton and Barack Obama are jockeying for position.

Fredricka Whitfield is monitoring the wires. She's keeping an eye on all the video feeds coming into THE SITUATION ROOM from around the world.

Fred's joining us with a closer look at some other stories making news -- hi, Fred.

FREDRICKA WHITFIELD, CNN ANCHOR: Hello to you, Wolf.

The eldest daughter of slain civil rights leader Martin Luther King died late last night in Santa Monica, California. A spokesman for the King Center in Atlanta says there is no official cause of death, but the family believes it may have been from a heart problem.

Yolanda King was best known as an actress and motivational speaker. She was 51.

And you've probably seen the ad for oil giant B.P.. It touts itself as a green company helping to protect the environment. Well, documents released to Congress today make that claim a little more difficult to swallow. The documents show that managers were pressured to cut maintenance on pipelines in Alaska's Prudhoe Bay region. The result was two significant spills last summer. All this while B.P. was raking in more than $100 billion in profits.

And gas prices at a record high for the fourth straight day. AAA now says the average price for a gallon of gas is slightly over $3.10 nationwide. Prices are now up nearly 9 percent over the past month.

And the National Guard in New Jersey says a flare dropped by an F16 jet during training exercises may have caused a brush fire that has burned more than 13,000 acres. Firefighters are contending with the strong winds and dry conditions. And the blaze is said to be only about 10 percent contained. About a dozen homes have been damaged so far and 2,500 people have been evacuated -- Wolf.

BLITZER: It's a pretty bad fire over there.

Fred, thank you for that.

Meantime, new pictures are coming into THE SITUATION ROOM from New Jersey thanks to our I-Reporters on the ground.

We do have some I-Reporters in Jersey, and some pretty frightened, like Debra Didonata, a 21-year-old in Barnegat, New Jersey. Says this is ash on her back porch. Little by little, they're evacuating her area. She says they have now evacuated areas that are about five miles away from where she is -- or five minutes, rather -- even closer than that. She's a few hundred feet east of the Garden State Parkway, at Exit 67. You're looking at a piece of ash there again on her porch.

Right now the fire is on the other side of the parkway. They're, of course, worried. If it jumps the parkway, there that will be thousands of homes in trouble.

This from Daniel Curran in Manahawkin, New Jersey, another I- Reporter. This neighborhood in Ocean Anchors. He says the fire is about three miles from his house. There is smoke in the house even though the windows are closed. He, again, frightened for his safety.

If you want to send an I-Report to CNN and let us know what's going on in your neighborhood, cnni.com/ireport -- Wolf.

BLITZER: They do a fabulous job for us, those I-Reporters.

Jacki, thank you.

Up ahead, the Republicans the morning after -- did they wake up after their second debate refreshed or with new headaches?

And the plain truth about a late night exodus from the debate site in South Carolina. Fasten your seat belts for this one.

Stay with us.

You're in THE SITUATION ROOM.

COMMERCIAL

BLITZER: Happening now, there's a $200,000 reward for information about the location of three American soldiers missing in Iraq, and officials say they've received more than 140 tips.

But are they getting any closer to finding those soldiers?

My interview with the chief U.S. military spokesman in Baghdad, Major General William Caldwell, coming up in the next hour.

Also coming up in the next hour, chaos in Gaza. Some long time veterans of the region say the situation is as bad as they've ever seen it. We're going to go there, to Gaza. Also, the British military has a change of heart on Harry. We're going to tell you whether or not the so-called warrior prince will actually be heading off to Iraq.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

The Republican presidential candidates are fanning out on the campaign trail once again today, and some of them may be feeling a little bit bruised after their testy second debate.

Our senior political analyst, Bill Schneider, is standing by.

But first, let's go to our chief national correspondent, John King.

He's joining us in Columbia, South Carolina.

That's where the debate took place -- John, what are the candidates saying about their respective performances last night and what are they saying about their rivals?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, Wolf, of course, each candidate comes out of the debate saying he thinks he did a good job.

At last night's debate, a lot more energy, and indications even today, as the candidates go back on the trail, that the Republican race is getting more pointed and more personal.

(BEGIN VIDEOTAPE)

(APPLAUSE)

KING (voice-over): First, a breakfast meeting with state Republican leaders from across the country, then signs from Mitt Romney the GOP campaign will keep its more contentious tone.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: You guys up all night last night?

KING (on camera): Doing all right, yes.

(voice-over): In an interview with CNN, the former governor sharpened a contrast from Tuesday's debate, casting Senator John McCain's positions on campaign finance and immigration as out of step with conservatives.

ROMNEY: He's standing by two bills that are not very good. And I think -- I think, rather than hanging on to those, he ought to move on and say they were mistakes.

KING: Then a challenge to Rudy Giuliani's debate theme that he is the GOP's best general election hope -- standing with his wife of 38 years, a Romney line that could be interpreted as suggesting Giuliani's two divorces make him a weaker candidate.

ROMNEY: Republicans win when they have a stool, if you will, with three legs, strong military, strong economy, strong families. And it's just not going to be possible to have a nominee that can't speak on all three topics well and with passion and with a record that suggests that they have the -- the capacity to generate a strong family, a strong military, and a strong economy.

KING: Republicans say a more aggressive Romney is no surprise. He lags behind McCain and Giuliani in most national polls, and is looking to make the most of early debate performances.

If there was one signature moment Tuesday, it was when Giuliani turned indignant, challenging libertarian Ron Paul's assertion that blamed the 9/11 attacks on past U.S. military involvement in the Middle East.

RUDOLPH GIULIANI (R), PRESIDENTIAL CANDIDATE: That's really an extraordinary statement. I don't think I have ever heard that before, and I have heard some pretty absurd explanations for September 11.

KING: For Giuliani, the goal was to project strength and leadership, the attributes he hopes will matter most.

But rivals were equally determined to keep Giuliani on more shaky ground, former Arkansas Mike Huckabee among those who challenged Giuliani's formulation that he personally opposes abortion, yet supports a woman's right to terminate a pregnancy.

ROB WHITE, SENIOR MINISTER, TRINITY BAPTIST CHURCH: We would like to pray with you this morning.

KING: Minister Rob White of Columbia's Trinity Baptist Church was impressed with Huckabee, McCain and several others, but says Giuliani's support for abortion will be a tough sell among Christian conservatives here and across the South.

WHITE: That's not my political bent. That's my -- my personal bent and my theological conviction, where God has impressed one, because life is sacred. And I believe it's sacred from the womb, from the conception.

(END VIDEOTAPE)

KING: In the audience last night were state Republican chairmen from across the country. They're meeting here in Columbia today, Wolf. Most we spoke to liked the debate. They thought the energy and the back-and-forth was good for the party, good for the Republican Party.

To them, the most enlightening exchange was that exchange between Congressman Paul and Mayor Giuliani about 9/11. One Republican chairman put it this way: Congressman Paul pulled the grenade, pulled the pin on a hand grenade, but forgot to throw it -- Wolf.

BLITZER: And he's going to be here in THE SITUATION ROOM, Congressman Ron Paul, in the next hour.

John, a lot of analysts, though, saw that exchange, and they thought that was manna from heaven for Rudy Giuliani, because it could underscore his involvement as the mayor right after 9/11.

KING: Absolutely.

Mayor Giuliani has been back on his heels a bit, trying to clarify, trying to come up with a consistent answer on abortion. In a state like this, where Christian conservatives are so prominent, he does not want to talk every day about abortion.

So, the chance to get to his greatest strength, 9/11 leadership, remind people of why they fell in love with America's mayor on those days, that was manna from heaven, your words, for Rudy Giuliani.

Still a ways to go. Many of the state chairmen said he's getting better, almost complete in his answer on abortion, but needs to get a little better in how he delivers it. But, no question, that one moment was the moment of last night's debate.

We will see how it plays out.

BLITZER: All right.

And, once again, Ron Paul will be here in THE SITUATION ROOM in the next hour.

John King on the scene for us in Columbia, South Carolina.

After two debates, voters now have a better sense of the Republicans who are running for president. But were they left wanting more?

Let's turn to our senior political analyst, Bill Schneider.

Do the voters think that there are enough Republicans out there -- Republican voters, that is -- Bill?

SCHNEIDER: Republicans are looking for a winner with strong conservative credentials. Could that be Newt Gingrich? He's certainly conservative, and he once looked like a winner.

DAVID WINSTON, REPUBLICAN POLITICAL STRATEGIST: How does he translate what he did in '94 into today? And how does he then translate that into appealing to an electorate again?

SCHNEIDER: Some are looking at Fred Thompson, who seems like a winner. Is he will a reliable conservative?

WINSTON: He is sort of well-known at a sort of -- sort of soft level, but, in terms of the details about him, I think one of the challenges for him is, he's going to having to flush those out if he decides to get in.

SCHNEIDER: Another actor? Well, sure. After all, Reagan's acting skills were crucial to his political success. He was the great communicator.

(END VIDEOTAPE)

SCHNEIDER: Thompson is also a self-styled populist, who likes to run as an outsider against professional politicians and big government. Sure, Thompson used to be a high-powered Washington lawyer and lobbyist and senator. But he got out -- Wolf.

BLITZER: Bill Schneider, thank you.

There was something of an in-flight after-party following last night's Republican presidential debate.

Our political editor, Mark Preston, was on an early flight out of Columbia South Carolina, bound for Reagan National Airport here in Washington. Check this out, the seating arrangement. Take a look and see who else was on board.

Congressmen and presidential rivals Duncan Hunter and Ron Paul, they were both seated near the front of the plane, behind them, two more White House hopefuls, Senator Sam Brownback, former Governor Tommy Thompson.

Rudy Giuliani supporter and former solicitor general Ted Olson, by the way, sat between them -- also on board, South Carolina's senators, Mitt Romney supporter Jim DeMint and McCain supporter Lindsey Graham.

Good thing the plane landed safely here in Washington -- lots of political talk on that flight, I assume.

Don't forget, we're gearing up for our own big debates in New Hampshire. CNN, WMUR and "The New Hampshire Union Leader," they're -- we're all co-sponsoring back-to-back debates early next month.

The Democratic candidates square off on Sunday night, June 3. The Republicans go head to head Tuesday night, June 5. You're going to want to see it, all right here on CNN.

Coming up: He had the most controversial line of the night. At the Republican debate last night, Congressman Ron Paul suggested that American policies in the Middle East -- Middle East may have been responsible, at least in part, for the 9/11 attacks. Ron Paul will be here in THE SITUATION ROOM in the next hour.

Also, are Republicans and Democrats on the brink of a major deal on one of the nation's most divisive issues? We will have the very latest on the Senate negotiations on immigration. You're going to want to stick around for that.

We will be right back.

(COMMERCIAL BREAK)

BLITZER: There's word around Washington right now that a major deal may be in the works on the extremely divisive issue of illegal immigration.

Our congressional correspondent Andrea Koppel, she is working the story on Capitol Hill.

What are you hearing, Andrea?

ANDREA KOPPEL, CNN CONGRESSIONAL CORRESPONDENT: Wolf, I have spoken to several top Republicans and one aide to a senior Democrat who are intimately involved in these negotiations, and they all say that an immigration deal is, in their words, very close, and that they could have a final draft copy of a bill ready to circulate as early as tomorrow morning.

At this hour, in fact, Wolf, both Democrats and Republicans, a very small group of them, are meeting behind closed doors to try to hammer out remaining sticking points. BLITZER: Well, what are those sticking points, Andrea?

KOPPEL: There -- there are at least two of them, and they involve -- one has to do with family members of legal immigrants in this country. Republicans want that to be limited only to small children and spouses. Democrats want there to be the majority of family members who would be allowed or at least eligible to move to the U.S.

The second issue has to do with temporary workers. Republicans want that to be temporary. Democrats, on the other hand, say they want there to be the option of having a path to citizenship.

BLITZER: Bottom line, so, what's in the deal?

KOPPEL: Two key components to it, Wolf. One has to do with those 12 million estimated undocumented workers in the U.S. They would be eligible to get what's known as a Z-visa. They would have to pay a fine of about $5,000 that they would pay back over a number of years.

They would then, at some point, have to leave the United States, what's known as a touchback program, return to their country of origin, to reapply for a visa. It would usually be the head of household that would have to do that.

The second key component, Wolf, would have to do with this temporary worker program. There would be 400,000 new workers who would be allowed to come to the U.S. every year. These workers would only be allowed to stay for two years. They would have to return home for a year. They could do that three times, in other words, for a total of six years living in the United States -- Wolf.

BLITZER: All right, Andrea, thanks very much.

It's going to be a controversial deal, indeed -- the critics already calling it amnesty, and the supporters denying this amounts to amnesty. We are watching the immigration battle unfold.

Up next: Rudy Giuliani feels like he had a good night last night.

(BEGIN VIDEO CLIP)

GIULIANI: Now that we look at the result of the day, we had a great strategy.

(END VIDEO CLIP)

BLITZER: But did it create any distance between himself and his rivals? Our "Strategy Session," that is coming up next.

And visiting Iraq, it seems like it's becoming something of a political rite of passage. So, how many times have the presidential contenders actually been there? We are going to have the numbers.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Joining us now in our "Strategy Session" to talk about last night's debate -- the Republican debate, that is -- and to look at some new poll numbers, our "Strategy Session" guests, Donna Brazile, our CNN analyst, and Terry Jeffrey. He's editor at large of "Human Events."

Guys, thanks very much for coming in.

Let's talk a little bit about last night's debate.

There was this exchange between Mitt Romney and Rudy Giuliani -- excuse me -- and John McCain, Mitt Romney and John McCain.

(BEGIN VIDEO CLIP)

ROMNEY: My fear is that McCain-Kennedy would do to immigration what McCain-Feingold has done to campaign finance and money in politics, and that's bad.

(APPLAUSE)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: I haven't changed my position even -- on even-numbered years or have changed because of the different offices that I may be running for.

(END VIDEO CLIP)

BLITZER: All right, Terry, who won, in -- in terms of that little battle, among Republicans like you?

TERRY JEFFREY, EDITOR, "HUMAN EVENTS": Well, I think McCain did, because he went -- everybody knows what McCain's record is on campaign finance and all that.

But he went right to Romney's weakness. Romney has been doing an excellent job in these debates in the way he presents himself. He's staked out positions on the issues that conservatives love. But, for some reason, he's not getting traction. And I think it's exactly for the reason that John McCain pointed to. He's seen as a flip-flopper.

So, I think John McCain neatly underlined the key vulnerability of Mitt Romney.

BLITZER: Do you agree, Donna?

DONNA BRAZILE, CNN POLITICAL ANALYST: Absolutely.

Look, I thought Mitt Romney came off very well in the first debate. But, last night, he seemed a little stale, wasn't on his game, and wasn't able to come back after John McCain suggested that he's the one that has a problem with flip-flopping.

BLITZER: And a lot of people are talking about this little exchange between Rudy Giuliani and Ron Paul, Congressman Ron Paul.

Let me play a little clip from that.

(BEGIN VIDEO CLIP)

REP. RON PAUL (R-TX), PRESIDENTIAL CANDIDATE: They attack us because we have been over there. we have been bombing Iraq for 10 years.

GIULIANI: That's an extraordinary statement, as someone who lived through the attack of September 11, that we invited the attack because we were attacking Iraq. I don't think I have ever heard that before. And I have heard some pretty absurd explanations for September 11.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

BLITZER: He's really a libertarian, Ron Paul. But he sort of served it up for Giuliani to whack that ball out of the park, especially with that crowd.

JEFFREY: Well, there's no question about it.

I mean, Ron Paul is a good guy. He's a highly principled libertarian, which is really an important part of the Republican Party coalition, not the mainstream of the Republican Party.

He set it up for Rudy Giuliani to be able to reinforce, in the minds of Republicans, exactly what it is they like about Rudy Giuliani, how resolute he was on 9/11, how uncompromising he is in dealing with al Qaeda and other terrorists. Ron Paul did a favor to Rudy Giuliani last night.

BLITZER: He's almost like a classical isolationist, if you will, when it comes to U.S. involvement overseas.

But go ahead, Donna.

BRAZILE: Well, look, I think, last night, it really raised the question of, what is he doing on the playing field? He gave Rudy a softball, and he batted it right out of the park.

I'm sure that, today, the Giuliani camp is sending him flowers or e-mails suggesting that, do it again, because it gave the mayor an opportunity to highlight his real strength, which is, you know, leadership on 9/11.

JEFFREY: But you know what? I think it's a good thing that Ron Paul is in that debate and some of these other candidates are in there.

Ron Paul is expressing a lot of views on good things where a lot of Republicans out there in this country agree with him. And I think it's a good thing that different voices in the Republican Party and the Democratic Party, at this early phase in a presidential campaign, get to have their voice in the debate.

BLITZER: He will be here in the next hour, Ron Paul, in THE SITUATION ROOM.

This new Gallup poll shows that, among Republicans and Republican leaners, Giuliani's lead has increased. He's gone up from 29 to 34 percent. McCain is at 20 percent. Actually, it's -- I'm confused a little bit. He's gone from 34 to 29 percent in this Gallup poll. It's gone down a little bit. McCain is at 23 percent, Fred Thompson, who is not running yet, 12 percent, Mitt Romney at 8 percent.

What do you think of that?

JEFFREY: Well, I think the most interesting thing in this poll, actually, is the resiliency of John McCain.

You know, when the fund-raising numbers for the first quarter came out, John McCain had raised less money than expected. Everybody thought his campaign might be going into the tank.

He has a lot of problems with conservative voters because of his record. But he's hanging in there. And, eventually, I think, Wolf, this is going to get down to a race between Rudy and the anti-Rudy. And the conservatives will rally around the anti-Rudy.

McCain is still in the ballpark of ending up, before this is all over, as being the anti-Rudy that the conservatives will get behind him.

BLITZER: Let's take a look at the Democratic side in this new Gallup poll: Hillary Clinton slipping slightly. Hillary is at 35 percent. Barack Obama is at 26 percent, Al Gore, who is not running, at 16 percent, John Edwards down at 12 percent.

What do you think? She's holding -- she's holding on to that lead, although Barack Obama is doing slightly better than he was a week ago.

BRAZILE: Yes, I think most people thought that Barack should have, you know, by now hit the 30 percent mark.

But the fact is, is that -- that Clinton has one of the strongest campaigns on the field right now. She's pulling in supporters. She's doing voter registration. She has a message that finally I think is resonating. She's talking about change.

And what I'm surprised about, of course, is the fact that John Edwards is still at 12 percent. Al Gore at 16 percent. That suggests that there's still some...

(CROSSTALK)

JEFFREY: They're not polling in the beauty shops.

(LAUGHTER)

BLITZER: I will leave you with this poll, and then we will move on.

In the Harris poll that just came out, Hillary Clinton is at 40 percent. Barack Obama is at 27, Al Gore down at 13, and John Edwards once again down at 12 percent.

Donna Brazile, Terry Jeffrey, always good having both of you here in THE SITUATION ROOM.

BRAZILE: The race is still wide open on both sides.

JEFFREY: Good to be here.

BLITZER: Wide open. And the field could expand...

BRAZILE: Absolutely.

BLITZER: ... especially on the Republican side, maybe the Democratic side as well.

Still to come: honoring fallen troops. Who should decide when we do it and where? Jack Cafferty with your e-mail.

And the Internet is playing an increasingly prominent role in the presidential campaign. Now Senator Clinton is asking YouTube members to make an important decision for her. We're going to tell you what that's all about.

And later here in THE SITUATION ROOM: The British prime minister, Tony Blair, has paid a steep political price for his support of President Bush and the war in Iraq. Has that had an impact, though, on their personal relationship? Blair having dinner at the White House tonight with the president, we're standing by for that.

We will be right back.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I always enjoy our discussions. And I appreciate your...

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: How many times have the presidential candidates actually gone to Iraq? That's in today's "Radar."

All the presidential candidates are certainly talking about the war in Iraq, but who's actually been there, and how often? The political hot line offers this tally today: zero trips to Iraq, including for John Edwards, Rudy Giuliani, Dennis Kucinich, Ron Paul, and would-be candidate Fred Thompson -- with one trip each, Mike Huckabee, Barack Obama, Bill Richardson, Mitt Romney, and Tommy Thompson.

Two candidates have visited Iraq twice. That would be Sam Brownback and Tom Tancredo. Chris Dodd and Hillary Clinton have made three trips to Iraq each. Duncan Hunter, John McCain, and possible candidate Chuck Hagel rank near the top of the list. They have made more -- they have each made five trips to Iraq.

And the most frequent flyer to Iraq of all the presidential field, that would be Senator Joe Biden. He's made seven trips to Iraq. We should note, though, that these are all relatively short fact-finding trips, not lengthy stays in the war zone, sometimes only a day or two or three, often much of it being -- taking place in the Green Zone as well.

But we're monitoring all of this. And we will watch it with you.

Today, Hillary Clinton is going online to ask supporters and YouTube users a very important question: What should her campaign theme song be?

And people can vote here at the Web site. They include "Get Ready" by the Temptations, the Shania Twain "Rock This Country." And the Dixie Chicks make an appearance with their "Ready to Run." Online write-in candidates are also available in the online voting, which just started in the last hour.

And, in posing this question to the YouTube community, Hillary Clinton was taking advantage of the YouTube Spotlight program. This is where presidential candidates go onto the site each week and ask a question of the YouTube community. In posing her question, Hillary Clinton had a little bit of fun.

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: Whatever song you choose, though, I make you this solemn and sacred promise.

(singing): ... for the land of the free.

I won't sing it in public, unless I win.

(END VIDEO CLIP)

TATTON: The voting, Wolf, ends next week.

BLITZER: Thank you, Abbi for that.

Let's go to Jack Cafferty in New York.

Don't stop thinking about tomorrow, Jack. You remember that theme song for another presidential candidate named Clinton? JACK CAFFERTY, CNN ANCHOR: I do. I remember it well. And -- and it worked for him.

The question this hour is: Should governors be allowed to order flags lowered in order to honor fallen U.S. troops?

Brian in San Diego: "I say it should be a national law. All American flags must be flown at half-staff until our troops stop dying in the Iraqi and Afghan theaters. If America can fly the flag at half-staff for the Virginia Tech students, then America can surely fly the flag at half-staff for our fallen soldiers, who are dying day in and day out in Iraq."

Dave in Santa Cruz, California: "Remember Vietnam? Remember what finally got the country behind the idea of getting out of Vietnam? It was the media finally showing the dead being brought back to the U.S. for burial. Yes, the governors should be allowed to demand flags be flown at half-staff to honor fallen soldiers. And the media should be allowed to bring to America's attention the horror of seeing our children's coffins and body bags being unloaded after their final trip home. The way the White House is ignoring these tragic deaths is unconscionable."

Patrick, U.S. Navy commander, in Greenlawn, New York: "Jack, as a Naval officer and veteran of two wars now, I don't feel flags should be flown at half-staff for those who have died in battle. I always looked at the sacrifice I signed up to make and the sacrifice of those who have fallen in past generations as being honored by a flag flying at its highest point. We fight and are willing to die so it can fly high, so everyone can sing the national anthem in freedom and with pride."

Bill in Portland, Oregon: "I'm surprised by your question, Jack. Just to let you know, and -- and your viewers, our governor in Oregon, Ted Kulongoski, has ordered flags lowered to half-staff for every fallen Oregon soldier, and has personally attended almost every funeral, a good example for others to follow."

And Dan in Arizona: "Our flags should have been lowered when the first U.S. soldier was killed. And they should remain lowered until they all come home. Shame on our government" -- Wolf.

BLITZER: Jack, thanks.

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